137 / 248
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
CONTINUED
For the year ended 31 May 2015
135
BLUE LABEL INTEGRATED ANNUAL REPORT 2015
6.
INVESTMENTS IN AND LOANS TO ASSOCIATES AND JOINT VENTURES continued
Loans to associates and joint ventures
Interest
rate
2014
R’000
Oxigen Services India Private Limited
Libor + 1.50%
29 552
25 068
Blue Label Mexico S.A. de C.V.
4.50%
—
1 054
2DFine Holdings Mauritius*
10%
163 634
127 373
Supa Pesa South Africa Proprietary Limited
11%
7 900
—
Lornanox Proprietary Limited
0%
6 000
—
Forensic Intelligence Data Solutions Proprietary
Limited
—
305
207 086
153 800
* Refer to note 29 for details on the surety relating to this loan.
The loans are neither past due nor impaired with a low risk of default. Refer to note 3 for more details.
Loans to associates and joint ventures are repayable on demand.
Shares in associates and joint ventures acquired during the year
Effective
Date acquired percentage
Supa Pesa Africa (Mauritius) Limited
Joint venture
1 March 2015
50
Supa Pesa South Africa Proprietary
Limited
Joint venture
1 March 2015
50
Lornanox Proprietary Limited
Associate 22 January 2015
40
Mpower Softcomm Private Limited
Associate
1 June 2014
21.6
Blue Label Mexico S.A. de C.V.
Joint venture 1 September 2014
1.07
During the year, Supa Pesa Africa (Mauritius) Limited and Supa Pesa South Africa Proprietary Limited
were acquired for a consideration of R30 million and R50 000 respectively. Lornanox Proprietary
Limited was acquired for a consideration of 80 cents.
The R30 million acquisition price of Supa Pesa Africa (Mauritius) Limited includes a cash element of
R0.1 million and a contingent consideration of R37.5 million if certain profit warranties are achieved.
The first three amounts of R9.83 million (R29.5 million in total) are based on the profit of Supa Pesa
Africa (Mauritius) Limited for the years ended 31 May 2016, 31 May 2017 and 31 May 2018. The
fourth amount of R8 million is based on the cumulative profits for the year ending 31 May 2018.
The potential undiscounted amount of all future payments that the Group could be required to make
under this arrangement is between Rnil and R37.5 million.
The fair value of the contingent consideration arrangement of R29.9 million was estimated by
applying the income approach. The fair value estimates are based on a discount rate of 9.25%. For all
profit targets management has assumed a probability of 100%. In determining these probabilities
management has assessed the cash flow projections based on financial budgets approved by the
Board and Directors for the forthcoming three years which are based on assumptions of the business,
industry and economic growth.
Gold Label Investments Proprietary Limited and 2DFine Holdings Investments Mauritius each received
14.4% shares in Mpower Softcomm Private Limited as part of a demerger transaction in Oxigen
Services India Private Limited. This was received by way of a dividend to the value of R1.4 million each.
In the current year, there was a further capital contribution of R50 million to BLM. This comprised
R49 million loaned in September 2014 together with the R1 million loan outstanding at the beginning
of the financial year. This resulted in a dilution of shares held by an outside shareholder increasing our
shareholding to 46.64%.
2015
R’000